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Naomi Responds to the Economist

By Naomi Klein - November 11th, 2002

A bunch of people have written to the site and asked me if I planned to respond to the attack on me in the current issue of The Economist. Frankly, I think the article is so nuts, it’s not even worth responding. But I would like to add some context that might help explain why an article so personal and childish was allowed to go to press in a publication that prides itself on being a cool voice of reason and authority on all matters economic.

It’s an editorial policy of The Economist not publish bylines on most of its articles. The article about me, though unsigned, was written by a reporter named Sameena Ahmad. I have had several previous encounters with this reporter, most recently, on September 25 2002, when I debated Ms. Ahmad in New York at the Centre for Ethical Culture. The debate was moderated by Brian Lehrer and an edited version was broadcast on WNYC. The debate was called “Pro Logo vs. No Logo” because one year earlier, Ms. Ahmad has written a cover story for The Economist attacking the ideas in my book, No Logo. Her story was called “Pro Logo: Why Brands Are Good For You.”

Because I knew that Ms. Ahmad was likely to challenge the credibility of my research and statistics—a common debating tactic and a convenient way to obscure the real issues—I decided to try to pre-empt this tactic by drawing ALL of my facts and figures for the debate from the pages of The Economist magazine. I thought it would be funny. Here is a transcript of my opening statement. Sources are indicated in brackets:

Thank you, Brian.

In the year since The Economist published its passionate defense of brands as a vehicle for social justice, the whole idea of trusting corporations has been taking a beating. I’m going to read you a couple of recent quotes—but I should warn you that they come from an unlikely source.

Here’s a quote:“Venerated corporate bosses have been exposed as fraudulent hucksters. Worse, many of the bedrock institutions of American capitalism—accounting rules, oversight bodies, boards of public companies—have been found wanting.” [“The unlikeliest scourge,” July 13-19, 2002]

Here’s another quote:“The sudden collapse of Enron…has shaken faith … in the integrity of corporate America, and in the Wall Street-centered model of capitalism that has been hawking its wares to investors the world over.” [“Capitalism and its troubles,” May 18-24, 2002]

This shameless corporate-bashing doesn’t come from the pages of No Logo. These quotes are from recent issues of The Economist magazine.

Sameena Ahmad’s task tonight is to defend the effects branding. We are going to hear that brands protect us. That having a powerful brand name that can be tarnished—like Nike, Martha Stewart or WorldCom—makes companies more responsive, more anxious to live up to our ethical standards.

Defenders of brands like to point to Nike—they say that in response to consumer outrage over sweatshop labour, Nike had to change its ways. Or they say look at Shell: it has spent millions buying ads just to let us know about its new social conscience. We are told that brand-name multinationals are cleaning up their acts because we want them to—and they want us to be happy. After all, if we aren’t happy, we won’t buy their products. We vote with our dollars—call it trickle-down ethics.

So forget the old tactics: Unions, people in the streets—they’re both passé. Even government regulation is not longer necessary, or so we are told. We can trust brand name companies to regulate themselves—with the help of their auditors.

But I started wondering, as I thought about this debate: does The Economist really believe this stuff? I decided to find out. Here’s what I learned reading back issues of Ms Ahmad’s own magazine.

Last year, The Economist reported on Shell’s attempt to “prove that it cared for the people who lived in its production areas.” The reporter quoted a leaked internal report about Shell’s philanthropic projects that found, and I quote, that “less than a third [of these projects] have been successful.” [“Helping, but not developing,” May 12-18, 2001]

The reporter noted that this “makes for depressing reading”—I couldn’t agree more.

Here’s another revelation: The Economist is well aware that brand-name pharmaceutical companies are doing a miserable job of meeting the desperate need for AIDS drugs in the developing world. In fact, the only AIDS-related success story I could find in two years of weekly issues was Brazil. There, the government has ignored brand names, broken drug patents, and delivered generic anti-retrovirals for free. And it has cut the number of AIDS deaths in half. [“Hope for the best. Prepare for the worst,” July 13-19, 2002]

And then there is the argument that corporations can be trusted to police themselves—The Economist sees through that one too, when it wants to. The magazine published a study this summer that found that when auditors challenged questionable business practices, the companies that paid those auditors bullied them into changing their minds in 57 per cent of the cases. [“I swear…” August 17-23, 2002]

And how are we to believe that brands are accountable to average consumers, when we read in The Economist that they aren’t even accountable to their shareholders. In the current issue, there is a very good article on Jack Welsh—I recommend it—which points out we didn’t get the goods on Jack from the SEC or any other watchdog. We got them from divorce papers filed by his wife. [“A helluva problem,” September 21-27, 2002]

A lot has happened since The Economist argued that brands are good for you.

And perhaps, Sameena, you feel that your passionate defense of brand-name corporations was a little bit overly enthusiastic—post Enron, post Anderson, post Martha Stewart and post Jack Welsh. If so, you are not alone. Let’s take comfort, one more time, in the current issue of The Economist. A final quote: there is a “pervasive sense of foolishness” among those who “worshipped [corporate CEOs] as gods, laying offerings of unimaginable wealth…at their feet. Now impoverished shareholders are choking on their own disgust.” [“A helluva problem,” September 21-27, 2002]

Of course some of us have been choking for years.

In closing, I am thrilled to have this opportunity to debate such an important topic with The Economist. But I’ve done these kinds of debates before, and often, they degenerate into tedious arguments about whose facts and statistics can be trusted.

So, to save some time, ALL of the facts and figures I’ll quote tonight come directly from the pages of your magazine.

Let’s stick to the facts. Of course I would love to stick to my own facts. But I’ll settle for sticking to yours.

Thank you

Over the course of the debate, I drew on other statistics from The Economist that, I felt, supported my position, not the arguments being made by Ms. Ahmad. Some examples:

The Economist likes to paint critics of this economic model as spoiled college kids in the U.S. and Europe but its reporters often tell another story: the true backlash is coming from the developing world. Why? Because as The Economist’s own reporters find time and time again, the record of these policies is abysmal:

According to The Economist:

The number of people living in dire poverty has remained roughly the same since 1987—1.2 billion people. [“Old battle; new strategy,” January 8-14, 2000]

According the The Economist, the only country where hunger has fallen sharply is China. [“Hunger: always with us,” June 15-21, 2002]. The Economist somehow fails to see the irony of holding up an extremely protectionist, interventionist communist country to prove that the free market still works.

On the other hand, in countries that have flung their borders open to deregulated trade and followed the recipes of the IMF, poverty has deepened. The Economist sometimes admits that this is indeed a problem. For instance, The Economist recently reported that “Flows of private capital to poor countries have grown (to over $100 billion in 1998), but much of this is short-term spending and little goes to the neediest countries or people.” [“The poor who are always with us,” July 1-7, 2000]

Here are some specific examples of this failure in trickle down economics, all drawn, once again, from the pages of The Economist:

Ecuador: last year, Ecuador’s economy was growing by 5.4 per cent—the fastest growth rate in Latin America, yet 56 per cent of the population is still poor. [“Ecuador’s economy: mixed blessings,” January 26-February 1, 2002]

India: through the mid-nineties, the economy grew by 7.5 per cent, but poverty decreased by only 1 per cent. [“Indian poverty and the numbers game,” April 29-May 5, 2000] According to the same article, before free-trade, the economy grew slower but poverty decreased faster.

Bolivia: it had a growth rate of 5 per cent, but average income dropped and more people fell into poverty. [“Patience runs out in Bolivia,” April 21-27, 2001]

Poland: Even with impressive growth rates of 5.5 per cent a year, according to The Economist “Poland is fast becoming two nations: one of comfortably-off city dwellers and one of dirt-poor villagers.” [“Poland: limping towards normality,” October 27-November 2, 2001]

Argentina: In a country which was once the richest in Latin America, 57 per cent of the population is now living in poverty—1 in 5 are hungry. [“Argentina: return to the dark ages,” April 27-May 3, 2002]

Mongolia: Since Mongolia adopted free trade policies, the number of street children exploded from 300 in 1992 to 4000 two years ago. [“Mongolia: Living in a manhole,” January 22-28, 2000]

This are not just any statistics: they are The Economist’s own statistics—in stark contradiction of its editorial line, which continues to maintain that increased “free trade” is the route out of poverty. And yet according to The Economist’s own reporters, investment and free trade are NOT leading to the promised prosperity in many countries around the world—they are making more people poor and some people very rich.

In its June 2-8 issue, The Economist even acknowledges that there is a relationship between these free market policies and increasing inequality, stating that “After China joins the WTO, officials expect inequalities to increase further.” [“To each according to his abilities,” June 2-8, 2001]

The Economist has also reported extensively on the backlash to these policies coming not only from so-called anti-globalization activists in Seattle or Genoa, but from the developing world itself.

For instance, the main conclusion of a recent pan-Latin American poll, published exclusively in English by The Economist, were that “Latin Americans … have lost faith in privatization; and want the state to take a more active role in regulating the economy.” [“Democracy clings on in cold economic climate,” August 17-23 2002]

Further privatizations are being rejected around the world, and The Economist has reported on several of these cases. For instance, it reported that “in 1992, Uruguayans voted in a referendum against privatizing telecoms.” [“Battling in Uruguay,” February 3-9 2001] And that although Ecuador’s “President Gustavo Noboa wants to privatize the state energy firms…71% of Ecuadorians…oppose electricity privatization. Last month the government halted the sale of ten of Ecuador’s 17 state-owned electricity distributors.” [“Ecuador’s economy: in hock,” April 13-19 2002]

As I quoted these statistics during the debate, Ms. Ahmad grew increasingly angry, a fact that was remarked upon by many people present and was reported on in The Village Voice, which described Ms. Ahmad’s demeanor as “enraged” and her closing statement as “a nasty tirade.”

Since The Economist doesn’t publish bylines on its articles, I thought this background might be useful, that it might even help explain why Sameena Ahmad and her editors are in such a foul mood these days. Personally I think we should thank them: The Economist’s research does a better job of refuting neo-liberal logic than it does of supporting it. And from their point of view, that’s got to sting.